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Good To Have You Back in U.S. Office Investing Sam

Sam Zell Teams with Behringer, Transwestern To Recapitalize 200 S. Wacker
June 15, 2011
Famed real estate investor Sam Zell has made his first U.S. office investment in years. Equity Group Investments (EGI) a private investment firm Zell founded by more than 40 years ago, has formed a joint venture with Transwestern Investment Company LLC and Behringer Harvard to recapitalize 200 S. Wacker Drive in the West Loop of Chicago's central business district.

Equity Group Investments invested in the building through the Zell Credit Opportunities Fund, which Zell created to focus on the recapitalization of over-leveraged assets and companies and to invest opportunistically in loans and credit securities in both the real estate and corporate arenas.

The premier 40-story Chicago office tower comprising 754,750 rentable square feet was previously acquired by Behringer Harvard in November 2007.

"We're beginning to see an increase in investment opportunities as more lenders and owners bring assets for recapitalization into the market. The 200 S. Wacker Drive transaction enabled us to acquire an interest in a great asset in a terrific location at below replacement cost, and we did it with strong partners that are also focused on improving the asset and positioning it for leasing success," Zell said.

"As a result of this joint venture, 200 S. Wacker Drive will benefit from enhanced access to capital and a stronger capacity to fund broker commissions and tenant improvements," said Stephen Quazzo, co-founder and CEO of Transwestern Investment. "The new ownership team will continue to pursue the program Behringer Harvard has been implementing for capital improvements expected to further enhance the Class A appeal of this already desirable property."

As a result of today's transaction, Behringer Harvard will retain a 10% ownership interest and continuing its responsibility for daily management of the property. J.F. McKinney & Associates will serve as the leasing agent.

The office property is currently about 69% leased with 286,219 square feet available for lease with average asking rents of $19.5/sf/year. Space available for lease includes floor-plates of 22,000 square feet and up to 110,000 square feet of contiguous space.

Major tenants at 200 S. Wacker Drive include The University of Illinois, Ziegler Wealth Management, Duff & Phelps Investment Management Company, T.Y. Lin International, Regus Business Centers, Russell Reynolds and PNC Bank.

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